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Every fourth Sunday, Regana Kooman-Henry discusses various aspects of the home buying process and home ownership experience.
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This is a Kun V studios original program. You're listening to special programming brought to you by raganna Kum and Henry of Coldwell Banker Premier Realty. The content of this program does not reflect the views or opinions of 91.5 jazz and more the University of Nevada, Las Vegas, or the Board of Regents of the Nevada System of Higher Education. You
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welcome to the Southern Nevada real estate Show. I'm your host, ragana. I am a real estate agent and broker, associate with Coldwell Banker, Premier Realty. I have been a licensed real estate professional since 1991 I am also a full time licensed real estate professional. Some of my accomplishments are, I am a quality service award winner. I am a member of the Veterans Association of real estate professionals. I have assisted in all types of real estate transactions over the years, from first time buyers to experienced sellers, and also corporate buyers and sellers transferring in and out of Southern Nevada. Today, I have a very special repeat guest on my show, Kirsi mbaki, a loan officer with the loan depot mortgage company. Kirsi has many years of full time experience with all types of mortgage financing. It's going to be a treat listening to her fill you in on all her knowledge this morning. Welcome back to my show. Kirsi, thank you, Rihanna, it's always a pleasure to be here with you. Yes, it is. It's always exciting and very educational when you're here. Thank you. So let's get started. All right, great. So I would like to welcome our listeners to mortgage insights where, where I break down complex mortgage topics to help you make more informed decisions about the home buying process. Today, I think we're going to dive into mortgage buy downs. There's been a lot of talk about this lately. And you know, I would specifically like to talk about the difference between temporary buy downs and permanent buy downs, and how to tell where the savings really lie for you. And hopefully, you know, we can help gain a better understanding of how they work. Yes, yes, that's great. Kiersey, and I think the first question for the listeners we should ask is, what is a rate buy down for listeners that aren't aware? Great, great, great ragana, let's start with the basics. So first we need to know what the definition of a rate buy down is, right, to fully understand it. So what a buy down is, is basically a financing arrangement where the buyer pays an upfront fee to lower the interest rate on their mortgage, and we all know that lower interest rate reduces our monthly payments, so this could make homeownership more affordable, and especially in the early years of a mortgage. Sure, and is the buyer the only one that can pay for this buy down? That's a great question. Morgana, so although the buy down is typically a buyer cost, you can request a credit from your seller to go towards the buy down or closing costs, you can potentially get a better bang for your buck, so to say asking the seller to contribute to a buy down rather than asking a seller to lowering their asking price. So all situations are different, so you definitely want to discuss this with with regard it for your best strategy, sure, sure. And so where do the actual savings come into play? Kirsi, and what is the difference between a temporary buy down and a permanent buy down for the listeners, great question again. Ragana, so let's let's start out with the temporary buy downs. Let's discuss those first so this option typically involves a reduced interest rate for the first few years of the loan. Commonly we see like a two one buy down or a one, zero buy down. Okay, and can you tell me? Tell us what all those numbers mean? Kiersey, yes, of course, you know we see numbers, yeah, tell me what that means. Translate that into something I can understand. So of course, all these numbers, they could be confusing, but especially if you're not accustomed to the lingo. But we'll start with like a two one buy down. So on a two one buy down for the first year, the interest rate is reduced by 2%
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and in the second year, it's reduced by 1% and then after.
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That it's going to revert to the original going rate at the time that you locked the loan. So for example, let's say that the going rate is 6%
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the first year, your payment would be based on a rate of four. So that's going to be a significant reduction in your in your monthly mortgage. Sure, the second year, your payment would increase to a payment based on 5% and then after that two year period is done, your rate would adjust to 6% for the remaining life of the loan. So for a one zero buy down, then the rate is lowered by 1% but just for that first year. So an example of this is going to be, if you have a going rate of 6%
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the first year, your payment would be based on 5% and then the next year, it's going to adjust to six and be at 6% for the life of that loan, after that first year. Okay? And Kirsty, why would this be something a buyer would want to do for the listeners that are not understanding, again, another great question, because why am I going to put up all this money? Right? Right? So the options can be attractive for buyers that are expecting their income to increase, or those who anticipate refinancing in the near future. You know, you might have somebody that's going to school and they're going to be graduating, and their income will be increasing. You know, within that first couple of years of the mortgage, a lower payment can help them get, help them get into a home right now, instead of having to wait until their income increases. So that would be, you know, one reason that somebody would want to do that. And then, you know, you might have somebody that may be able to pay off a bunch of debt if they have a lower payment, you know, and then be able to handle that larger mortgage payment in a year or two. So, you know, everybody's situation is different. So it's really important that you discuss what your plans and your goals are with your mortgage, professional, professional so that they can give you the best options to suit your specific needs. And it's, you know, it's very essential to consider the total cost of buy down compared to the potential savings. You know the immediate relief in in monthly payments can help manage your cash flow, and especially, like I said, if you're expecting your financial situation to improve, but you know you have to keep in mind that these savings, they're short lived, and once the rate goes back to the original rate, then you need to be able to budget for those higher payments. So that is a temporary buy down. And then let's move on to permanent buy downs. So this option involves, you know, paying points up front. And I'm sure most people have heard of paying points on your rate. So typically, the cost for that is 1% of the loan amount for a quarter reduction in the interest rate. So it's not a one for one, you know, not 1% for a one point discount. It's sure one for a quarter. A lot of people get that confused. So I just wanted to to reiterate that, but that is for the life of the loan. So a permanent buy down is a good choice if you plan to stay in your home long term. Okay, you know, because the savings are gonna accumulate over time. Yes. So while the initial cost of that might be higher, the long term savings can be very significant. And if you stay in your home for many, many years, the cumulative savings on interest can can outweigh the upfront costs. Well, that's a lot of good information, Kirsty, and now those are great explanations, Kirsty, but sometimes it is easier for people to understand in terms of an example, can you tell us in an example? Kiersey, yeah, absolutely. I'm the same way. You know, you're gonna spit out a bunch of numbers for me. Make it relate to me and my situation, right? So let's illustrate that. So let's say you have a $300,000 loan at 4% interest rate. Yeah. Okay, so on a two one buy down, the cost for that might be, you know, roughly around $6,000 up front, but you get a savings of $400 a month, roughly in that first year. So you know that over the first year would be a savings in your payment of $4,800 right? So, I mean, I could do quite a bit with $4,800
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right? Like furnish that new house or pay off some credit cards. You know? Sure. So that versus if you opt to do a permanent buy down to red.
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Reduce the rate from four to 3.75
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you might pay around 3750 up front, and then your savings would be about $100 a month, okay, but if you consider that over the the 30 years, that's $36,000
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so that you know that's very significant,
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very so really, what, what, what it boils down to is, you know, you want to make the right choice. That's the right choice for you. Yes, right. So when you're deciding between temporary and permanent buy downs, you need to consider your financial situation, how long you plan to stay in the home and what your specific cash flow needs are, and it's often really just a balancing act between immediate savings and long term financial health. Sure, and that is a way to combat higher interest rates. Now, are there some other strategies for keeping costs lower in this market? Kirsty, yes, absolutely. Ragana, there's, there's many different strategies to to help keep costs low. And I'll go over just a few of them. Okay, so one way that you could do this is, if you're looking at new construction, you can buy early in, in new construction phases, so before any of the homes are built, you can, you can lock in on the early stages of communities before prices rise, because we all know towards the end, yes, the prices go up. So as more homes are built, the closer it gets to the final stages, your home's value will only increase. Yes, and you know, everyone listening out there, be sure to consult your realtor, such as myself, before visiting the models in the community, you want to make sure you are represented by your real estate agent who has your best interest at heart, because the realtors that work on site, they specifically represent the builder, right? And those contracts are pretty hefty,
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a lot, a lot of pages. You want somebody that knows what they're doing, a professional, to help you navigate through that process. Definitely, definitely. So a second option would be, like we talked about, you know, using a permanent buy down, you know, maximizing your buying power, if you paid like, two points, that could potentially mean an extra 50k in buying power, sure, and you know that 50k could jump you up into a price range and give you a lot more options for homes to choose from. So using that permanent buy down is a good strategy as well. Yes. Number three, I would say, you know, a lot of people don't think about it, but you want to explore your renovation loans, right? Yes, a renovation loan is like kind of buying a new home, but without the high taxes, without the fees. You know, a renovation purchase loan can allow you to buy a property that needs some repairs or renovations while financing both the purchase price and the cost of improvements with a single loan. Essentially, it's letting you buy a fixer upper without needing separate financing, you know, for the renovations, which can really simplify the process and potentially save you on closing costs, yes, and it's all in one mortgage, yes. And it also allows you to access the potential future value of the property after the renovations are completed. So your loan is going to be based on, you know, after the repairs are done. So another, another thing to think about is maybe take advantage of lender credits or program options that are available to you. And you always want to ask your lender about credits to cover your closing costs. If, if that's available, you could potentially qualify for programs that can cover down payment and closing costs. You know, you just never know, really what's available to you, and until you ask. So that's that's very important to do that. And then finally, you know, maybe don't sell to upgrade. You know, a lot of people are sitting on mortgages with historically low interest rates, and they really want to move Yes, so they don't want to sell their house and get rid of that that low payment. Yeah, you know. So an option is to maybe keep your current property as a rental and tap into a line of credit, or do a cash out refi on your on there to get the money to purchase a new home. Yes, and you know, the primary benefit of keeping your current mortgage while renting out your home is the potential to generate passive income, right? You know, by collecting rent, and that can cover a portion, or even maybe all of your mortgage payment, and essentially allowing you.
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To rent out your existing equity and potentially build wealth over time, yes, and especially if the property values appreciate in, you know, in the area. So this can be a good strategy if you need to move to a different location but want to maintain ownership of your current home. The key benefits of doing this are cash flow. If you rent, you could potentially collect excess of your mortgage payment, you know, create a positive cash flow, yes, essentially earning money from your property each month. Yes, you're building equity. Even while renting out your home. The value is still increasing, yes, and it will continue to increase over time, allowing you to build that equity on your investment. And owning rental property can be considered a long term investment, especially if you choose a desirable location with high rental demand. Sure. And then finally, you know, there's potential tax benefits for that. Just depending on what your situation is you might be able to deduct certain expenses related to managing your rental property from your taxable income. And who doesn't want a tax break? I do want a tax break. Me too. So you know what? That's it for today on mortgage insights. If you have questions, you can reach out to me at 208-589-1181,
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and until next time, let's make wise financial choices. Yes, Kirsi, you are wonderful that you're with your career such a wealth of knowledge. So thanks so much, Kirsi and Kirsi, please stick around to give your contact information again at the end of the show. Okay? So absolutely. Thank you, Regatta. Okay, you are welcome. Now I would like to talk briefly about the real vitalize program for sellers. For anyone thinking of selling their home, however, may be feeling stuck because the home needs repairs or updating, and you may not have the funds in order for your home to show at its best, in order to get the top market price for your home. Now, with the revitalized program, you're able to have the necessary repairs and improvements done up front on the home and not have to worry about the cost for the work done on your home until the home is sold. For more information on this program, my number is 702-596-1267,
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that's 702-596-1267
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now, on a different note, I would like to talk to the listeners out there about transparency. Now I know, for the listeners out there that listened to my show last month, you are aware of how I mentioned how very important transparency is with all your relationships, whether it be a business or a personal relationship, either type of relationship will definitely not last if there is not complete transparency. Now, I am very transparent when dealing with all my clients. I will tell you the truth, even if it's something that you do not want to hear. I would rather you know the truth than to give you false hope or be disappointed in the end, because I did not tell you the truth in the beginning. For example, if you hire me to sell your home, I will not be the one to tell you your home is worth a price that it's that's not realistic in the current real estate market, just because another realtor is telling you that your home's market value is higher, just to get you to hire them over me. Because what normally will happen is that in time, that same realtor is going to suggest to lower your asking price as time goes by on the market without any offers, time wasted. And now by this time, your home is showing a history, a history of too many days on the market without selling, and now potential buyers will want to test the water on you by offering you extremely low offers to see if you would accept, to see if you're going to buy it because of the home being on the market so long, it's always best to price the home correctly to avoid these types of Selling situations and to get the highest market price offers for your home. For anyone listening that is thinking even about purchasing a home, knowledge is power and having an experienced real estate professional as myself in your corner to be transparent with you about everything you need to know about purchasing a home is most important in this ever changing real estate market. For example, I will let you know if the home is priced correctly by sharing with you a market report for the home you want to purchase before you make an offer. This will consist of sold homes in the surrounding area that.
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As close to the same size, features and condition and as possible within the last few months. This is so, so important to know all this information in order for you to make an informed decision regarding the most expensive purchase that you will ever make, which is a home. So now I'm going to switch gears and talk about the real estate stats for Southern Nevada for September. These stats are from the Las Vegas realtor board and our stats for resale homes only. Here is the stats for September. 1, number 117, 191 single family homes sold. Number two, $479,900
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was the median price of a single family home sold. Number three, $499,915
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was the median price of new available listings on the market. Number four, there were 2830
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new single family home listings. Number five, $549,894
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was the median asking price of all single family homes available both new and not new on the market, excluding offers. Number 660, 1.5%
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of all single family homes went from available to under contract with a buyer in 30 days or less. Now let's switch to condos and townhouses. There were 486 condos and townhomes combined that were sold. Number eight, $299,500
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was the median price of all the condos and townhomes sold combined. Number nine, there were 833 new condo and townhome listings. Number 10, $310,000
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was the median price of all new condo and townhome listings combined. Number 11, $288,000
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was the median Available list price of all the condos and townhomes combined both new and not new on the market, excluding offers. Now 59.9%
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of all the condos and townhomes sold combined sold in 30 days or less. Now, if you missed any part of these stats, you can reach me at 702-596-1267,
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that's 702-596-1267,
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now I would like to ask the listeners out there a very, very straightforward question, and that question is, what qualities do you look for in a real estate professional when you are ready to sell or purchase a home, since a home is normally the most expensive transaction a person will ever do in their lifetime, and who you hire to represent you with the most expensive transaction ever matters also who you hire with your mortgage loan needs matters. That's why we had a professional loan officers, Kirsi speaking with us this morning about everything you know for mortgages now, a real estate professional and a mortgage professional are the key people to a successful real estate transaction, and are the two people that will either make or break your transaction. Experience matters, like I said earlier, transparency matters, integrity matters, honesty matters. I would like to know what you the listeners find most important when choosing a real estate professional and even a mortgage professional, you can reach me at 702-596-1267,
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that, 702-596-1267,
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and now, if you are seriously thinking of selling a home are low on funds, however you want your home to show at its very best, Don't forget earlier I mentioned the real vitalized program that will allow you to have the work and improvements completed on the home before you start showing the home to potential buyers, and you do not have to worry about the cost of the work done on the home until the home is sold. My number is 702596126, 025961267,
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that, 702-596-1267.
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For more information on this great program. Now, if you're looking to purchase or sell a home, even in another state, I can refer you to a real estate professional anywhere in the United States, and for more information on that. Again, my number is 702-596-1267
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that's 702-596-1267
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now, for anyone thinking of selling their home and just don't know where to start, I'm here for you. This is what I.
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Do, and this is my career to help you with all the necessary steps so you don't have to worry about it. I'm here to guide you step by step from the beginning to the end of the transaction. And if you are thinking of purchasing a home and you don't know where to start, I'm here for you as well from the beginning to the end, I will guide you with all the necessary details from the beginning to the end, you can ask me anything relating to real estate, and there is no such thing, no such thing as a silly question. After all, if you knew everything about real estate transactions, then real estate professionals would not exist, right? So just let me know how I can help you with your real estate needs. I'm here for you, the client, the customer. I take all my clients seriously, okay? And assisting a client with a home selling and buying process, I take that very seriously, and I promise I will always treat you the way I would want to be treated. This is how I do business. And to learn more about how I do business, my number again, it's 702-596-1267,
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and Kirsi, I promise I wanted you to stick around so you can give your number one last time. Maybe repeat it. Try slowly for the listeners out there, your name, your company name, so people can write it down to call you for anything relating to their mortgage needs. Yes, thank you again. I'm still here, so I am Kirsty and Bucky with the loan depot, not the Home Depot.
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Lot of people get that mixed up, but loan depot. And my number is 208-589-1181,
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again. Kirsi mbaki, 208-589-1181
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and my NMLS number is 1398336,
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thank you so much, Kirsty, it's always a pleasure. Always a pleasure. And I am ragana Cooman, Henry with Coldwell Banker Premier Realty, your host for the Southern Nevada real estate show that airs every third Sunday of the month at 8:30am
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my number is 702-596-1267
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that's 702-596-1267
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and my license number is BS, 27880,
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You can follow me on Facebook, Instagram, Tiktok and YouTube. Thank you so much as always for listening to my show this morning. And I wish everyone listening a great Sunday and a great week. You.
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You can catch ragana Cuman Henry Every Third Thursday at 220 in the afternoon with Rita live in her new time slot right here on 91.5 FM. Jasmine Moore.
Transcribed by https://otter.ai